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Website Articles for April
Stories included
- Accountants held liable for their missing partner’s losses
- New ‘fit note’ system gets underway
- The challenge of starting a new business
- Government drops plan to reduce time limit for debt recovery
- Development can proceed after covenants declared unenforceable
- Landlord wins appeal over altering charges
- Stamp duty threshold doubled for first-time home buyers
- Chancellor freezes inheritance tax threshold for next four years
- Women win equal pay claim against local authority
- Boy burned his passport so he could stay with his father
- Wills reveal people’s good intentions
Accountants held liable for their missing partner’s losses
Two accountants have been held liable for the losses caused by their partner who breached his duty of care to clients.
Four investors lost their money when the partner in question went missing after giving them investment advice. Judgement was later entered against him.
The investors then took action against the remaining two accountants in the firm for negligence and deceit. They submitted that the missing partner had given them advice in his capacity as a fully authorised member of the firm and in the course of the firm’s everyday business, and so the other two accountants were liable for the losses.
The accountants denied that their partner had been acting with their approval and said that he was not in fact authorised to give investment advice.
The court considered the evidence which showed that under an agreement drawn up by the accountants in 2005, the partner in question was not authorised to give investment advice even though he continued to do so.
One of the accountants was unaware that his partner was still acting as an adviser. The other accountant knew but turned a blind eye. Neither did anything to restrict their partner’s authority and neither said anything to alert clients to the fact that he was not authorised to give investment advice.
He was therefore allowed to continue providing advice in the ordinary course of the firm’s business and so the other two accountants were held liable for his actions.
Please contact us if you would like more information about professional negligence issues.
New ‘fit note’ system gets underway
The new system using “fit note” medical statements for employees who are ill is now coming into effect.
Until now, a doctor could provide a medical statement – often referred to as a sick note – giving an employee’s condition and indicating whether or not he was fit to work. The employer could use the statement as evidence for the purposes of sick pay etc.
Under the new system, effective from 6th April, the doctor can add a new category saying the employee “may be fit for work”. This could be used if the doctor believes the employee could work as long as the employer provides appropriate support. The doctor may also offer advice as what kind of support would be needed.
The employer doesn’t have to act on the doctor’s advice but it’s hoped the new system will help to get employees back to work sooner and so reduce absence through sickness. If the employer cannot or does not want to act on the advice then he can proceed as if the doctor had issued a statement saying the employee is not fit for work.
The new approach does not affect the employer’s obligations to pay statutory sick pay and make reasonable adjustments under the Disability Discrimination Act 1995.
Please contact us if you would like more information about employment law matters.
The challenge of starting a new business
Starting a new business can be an exciting challenge – even in these difficult times brought on by the recession.
In fact, many would say that periods of economic downturn are the best time to begin a new venture as the cost of premises and facilities may be lower.
There is certainly no doubting the importance of small and medium sized enterprises. They account for more than half of the UK’s turnover and provide millions of jobs.
With this in the mind, the Government has begun a £5m campaign to encourage veterans from the armed forces to set up new businesses. Former service personnel will be able to apply for grants of up to £7,500 and loans of up to £30,000. They will also have access to valuable advice and information as well as a mentoring scheme.
The challenges facing former service personnel will be the same as those facing anyone setting up a new business. They will need to make sure they do all the necessary research in advance as there are several pitfalls that could easily stifle progress or lead to failure.
Start-up businesses need to consider a variety of issues from employment matters to business contracts and leasehold agreements. There could also be concerns about how to structure the business.
Getting good legal advice at the outset can prevent damaging problems emerging later.
Government drops plan to reduce time limit for debt recovery
The Government has withdrawn its proposal to reduce the time limit for pursuing debts from six to three years.
It follows criticism from the credit industry that the move would lead to a flood of litigation with creditors being forced to take early court action to protect themselves against debtors who might abscond.
The measure was due to be included in the Civil Reform Bill but in a written parliamentary answer, the Justice Minister Bridget Prentice, announced that it was being dropped. She said: “The draft Bill will not now include provisions to reform the law of limitation of actions.
“These provisions were based on a Law Commission report of 2001. But a recent consultation with key stakeholders has demonstrated that there are insufficient benefits and potentially large-scale costs associated with the reform.
“In addition, the courts have remedied some of the most significant difficulties with the law that the Law Commission identified, for example, in relation to the limitation aspects of child abuse cases.
“The limitation reforms will therefore not now be taken forward.”
Development can proceed after covenants declared unenforceable
A company has won the right to proceed with a housing development after a court declared that covenants which might have prevented the project were no longer enforceable.
The company had been granted planning permission to build on a landlocked plot behind some houses. To complete the project it needed to provide an access road through the grounds of one of those houses, which it also owned.
However, the land was subject to covenants in favour of a building society which had owned the land in the early 1900s. It had ceased to exist in 1929 and the issue arose as to whether those covenants, which prevented the building of a road, were still enforceable.
The High Court ruled that they were not as the building society no longer existed. The judge added that even if the society did still exist, the covenants would still not be enforceable. This was because they were only intended to be exercisable by the society or its successors while they held land in the area.
Once they had disposed of all the land that might be affected, the covenants could not be enforced against new owners.
Landlord wins appeal over altering charges
A landlord has won its appeal to be allowed to alter its service charges and its charges for heating and hot water.
However, it cannot ask a tenant to pay extra to make up for a shortfall which occurred before she even moved into her flat.
Those were the findings of the Upper Tribunal (Lands Chamber) in a case involving a housing trust and one of its tenants.
The trust had sought to alter the relative amounts paid for general service charges and for heating and hot water in 2006/07. Its reason for doing so was to balance a surplus in service charges and a shortfall in heating and hot water charges in 2004/05.
The tenant objected and in 2008 the Leasehold Valuation Tribunal (LVT) held that the trust had failed to complete an Appendix of the Tenancy which meant it was not permitted to alter the service charge or the charge for heating and hot water from the initial sums specified.
The LVT also held that the trust could not charge the tenant extra to make up for a deficit that occurred before her tenancy began.
The trust appealed saying the failure to complete the appendix was merely a clerical oversight and did not mean it could not alter its charge for services. It also said that it could not recover the shortfall from the previous tenant and “there was nothing wrong with operating a continuing account for service and other charges which took into account a surplus as well as shortfall”.
The Upper Tribunal upheld the trust’s appeal relating to altering the level of service and heating charges. However, it dismissed the appeal relating to recovering the deficit from the previous tenancy.
In giving her decision, Her Honour Judge Alice Robinson, said: “I consider that if the Appellant wishes to be able to charge for services on this basis and in particular to charge a tenant for services supplied to a former occupier because the previous service charge estimate was too low then the Tenancy must clearly say so.
“It does not. I recognise that the shortfall cannot be recovered from the previous tenant under the terms of the Tenancy, assuming them to have been the same. However, that does not entitle the Appellant to recover them from the Respondent unless the Tenancy clearly provides for it.”
The case was referred back to the LVT to consider the reasonableness of the service charge, including heating and hot water, for 2006/07.
Stamp duty threshold doubled for first-time home buyers
The stamp duty threshold for people buying their first home has been doubled from £125,000 to £250,000.
The new limit will remain in place for two years until March, 2012. It means first-time buyers will pay no duty at all when buying properties up to the £250,000 limit. The move was announced by Chancellor Alistair Darling during his budget statement. He estimates that nine out of ten first-time buyers will benefit.
Mr Darling says the change is also designed to help the housing market which has now begun a slow recovery.
It’s not good news for everyone, however. Stamp duty is being increased to 5% for residential property costing more than £1m. That will come into effect in April next year, after the General Election.
The increased threshold for first-time buyers came into effect on 25th March and relates to completion dates. It means that people already in the process of buying their first home will benefit as long as they complete before 25th March 2012.
The new limit only relates to people buying their main home. Those buying a holiday home or a buy to let will not qualify.
Please contact us if you would like more information about how the stamp duty changes might affect you, or about any aspect of buying and selling a home.
Chancellor freezes inheritance tax threshold for next four years
The Chancellor, Alistair Darling, has frozen the individual inheritance tax threshold for the next four years.
The threshold had originally been due to increase to £350,000 but last year Mr Darling announced it would remain at £325,000 until 2011. Then, in his Budget speech, he announced that there would be no increase before 2014.
He said the move was necessary because of the current economic downturn.
The announcement will no doubt be a disappointment to many people and highlights the need to plan ahead in order to ensure that as much of your estate as possible is passed on in a tax efficient way to your beneficiaries.
Government announcements on inheritance matters often prompt people to review their wills, trusts and overall financial arrangements. A little careful planning now can prevent thousands of pounds being wasted in the future.
Please contact us if you would like more information about wills, trusts and any matter relating to inheritance planning.
Women win equal pay claim against local authority
A group of local authority care workers have won an equal pay claim after discovering that men in comparable jobs were receiving bonuses.
The women were all employed by Sheffield City Council which introduced a productivity scheme for a section of workers who were predominantly male. It argued that this did not contravene the Equal Pay Act 1970 because the bonuses could not be applied to the care staff due to the nature of their work.
Both the Employment Tribunal and the Employment Appeal Tribunal rejected the women’s claims on the basis that the bonus scheme was a genuine initiative to increase productivity among a group of local authority workers who just happened to be male. It was not therefore tainted by any issues relating to sex.
The women refused to accept the decision, however, and took the case to the Court of Appeal. It has now ruled in their favour.
It held that the tribunal decisions were perverse because the productivity bonus created a disparity of pay between the men and the women – even though that had not been the intention when it was introduced. The authority had failed to show that the scheme was objectively justified.
Please contact us if you would like more information about employment law.
Boy burned his passport so he could stay with his father
The Family Court has had to rule on the finely balanced case of a 13-year-old boy who burned his passport so he could stay with his father in England rather than return to his mother in Portugal.
The boy’s parents had separated after a brief marriage. After long legal proceedings, the mother was granted custody and the boy went to live with her in her native Portugal. The father was granted extensive contact arrangements.
The boy enjoyed a long holiday with his father in the summer of 2008. Shortly before he was due to return in September, he told his father that he had burned both his British and his Portuguese passports so that he would not be able to return to Portugal.
The father told the mother that, as she had their son’s birth certificate, she would have to apply for a new passport for him. She appeared to make no effort to do this and so the father enrolled the boy in a local school.
In April 2009, the father found the boy’s British passport. The mother then began legal proceedings claiming that the father had wrongfully retained the boy in England.
The court held that the father had not wrongfully retained the boy to begin with because he was prepared to let him return to Portugal. He was only prevented from doing so by the fact that the boy said he had burned his passport.
However, the father’s attitude then changed because the boy made it clear that he did not want to return to Portugal. The father became uncooperative and opposed the mother’s attempts to get her son back.
This amounted to wrongful retention. However, the court held that the boy should still be allowed to stay in England with his father. This was because the Hague Convention on the Civil Aspects of International Child Abduction 1980 allowed for a “child’s objections” to be taken into account in cases like this.
It stated that if a child objected to being “returned” to one of his parents, the court should take account of his views as long as he was mature enough to speak for himself. Other conditions also had to be met. For example, it had to be clear that child’s views were realistic and had not been influenced by parental pressure.
The court was satisfied that the conditions were met in this case and so the boy was allowed to remain in England with his father.
Please contact us if you would like more information about any aspect of family law.
Wills reveal people’s good intentions
Nearly one in four people who are planning to make a will want to leave money to charity, according to research by Standard Life.
Young people seem to be the most public spirited with 40% of 18 to 24-year-olds intending to make a charitable donation. Single people are more likely to make donations than those who are married, cohabiting or divorced – possibly because they are less likely to have children or other dependants.
It may be heart warming to see such generosity but, of course, for the good intentions to be realised, people actually have to make a will in the first place.
Unfortunately, many people never get round to doing this which means they die intestate.
If that is the case then their wishes will not be known and their estate will be divided in a way laid down by law. It means their money may not go to the people – or the charities – they would have chosen themselves.
Many people may not like the thought of making a will and the associations that go with it but it is the only way of ensuring that your estate is passed on according to your wishes. A solicitor can make the process quick and easy while ensuring that all the paperwork is carried properly in accordance with the law.
Please contact us if you would like more information.
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